Project #76900 - Business ( finance)

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b.What are the generally accepted accounting principles (GAAP? What are the purposes of a journal and a ledger?

c.What is the difference between operating income and net income? What is the difference between liabilities and equity?

2. 2) Given the information in the following table:

Quarter 3, 2012

Quarter

September

August

July

Days outstanding

Total

1-30

31-60

61-90

Net accounts receivable

$5,000

$400

$1,000

$3,600

Net patient revenue

$15,000

$1,000

$5,000

$9,000

Quarter 4, 2012

Quarter

December

November

October

Days outstanding

Total

1-30

31-60

61-90

Net accounts receivable

$5,000

$3,600

$1,000

$400

Net patient revenue

$15,000

$4,000

$5,000

$6,000

Compute the days in accounts receivable, aging schedule, and accounts receivables a percentage of net patient revenues for Quarter 3 and Quarter 4 of 2012. Compare the two quarters to determine if the organization’s collection procedure is improving. Assume each month is 30 days. (Dollar figures are in thousands).

3. 3) A wealthy philanthropist has established the following endowment for a hospital. The details are as follows: a cash deposit of $ 7 M two years from now; an annual cash deposit of $4M per year for the next five years. The first $4M will start today; at the end of 5 years, the hospital will also receive a lump sum payment of $18M. Assuming the cost of money is 3.5%, what is the value of this endowment in today’s dollars? Show your work.

4. 4) Stillwater Hospital is borrowing $1,000,000 for its medical office building. The annual interest rate is 4.75%. What will be the monthly payments on the loan if the length of the loan is six years and payments occur at the end of each month? Show your work.

5. 5) Mercy Medical Mega Center, a tax paying entity, has made the decision to purchase a new laser surgical device. The device costs $500,000 and will be depreciated on a straight-line basis over five years to a zero salvage value. Mercy Medical could borrow the full amount at an11% rate for five years. The after-tax cost of debt equals 7%. Alternatively, it could lease the device for five years. The before tax lease payments per year would be $90,000. The tax rate is 35%. From a financial perspective, should Mercy lease the surgical device or borrow the money to purchase it? Show your work.

6. 6) The North Kingstown Cancer Infusion expects tremendous growth over the next year and is projecting the following cost and rate structure for the service. Revenues are $750 per patient. Rent is $3600 per month; staff cost is $195,000 per month; leases are $10,000 per month; other fixed costs are $20,000 per month; pharmaceuticals are $500 per patient; intravenous supplies are $35 per patient; and other patient supplies are $25 per patient. Show your work.

a.What volume of patients per month will it take for the center to breakeven?

b.If the center needs to make a profit of $75,000 per month, what is the new volume per month?